Climate change is big business (for the insurance industry)

The world's largest industry is taking climate change very, very seriously.

Although many industries have fought to prevent action on climate change, there's at least one major business that's taking it seriously, according to a recent perspective in Science. Climate change is estimated to cost the world economy $1.2 trillion annually, which is proving to be a stress test for the insurance industry. Lest you think that's a niche concern, insurance accounts for seven percent of the global economy and is the world’s largest industry.

Increasingly, weather and climate related catastrophes are costing insurers. The number of weather-related loss events in North America has nearly quintupled in the past three decades, according to a recent report from MunichRe. Sandy alone cost New York and New Jersey $80 billion, affecting individuals and business, and impacting health. Claims have more than doubled each decade since the 1980s (adjusted for inflation) and paid claims now average $50 billion a year worldwide.

Many insurers are using climate science to better quantify and diversify their exposure, more accurately price and communicate risk, and target adaptation and loss-prevention efforts. They also analyze their extensive databases of historical weather- and climate-related losses, for both large- and small-scale events. But insurance modeling is a distinct discipline. Unlike climate models, insurers’ models extrapolate historical data rather than simulate the climate system, and they require outputs at finer scales and shorter time frames than climate models.

A trio of global initiatives have been developed to respond to the push of shareholders and regulators and the pull of markets: the United Nations Environment Programme Finance Initiative, ClimateWise, and the Kyoto Statement. These in aggregate include 129 insurance firms from 29 countries. Since the mid-1990s, members of the initiative have supported climate research, developed climate-responsive products and services, raised awareness of climate change, reduced in-house emissions, quantified and disclosed climate risks, and incorporated climate change into investment decisions.

In an effort to adapt to climate change and mitigate losses, some insurers are trying to assist vulnerable customers by improving their resilience to a changing climate. Insurers are supporting interventions with benefits for both emissions reduction and adaptation. Many aim to curb green-house gas emissions from homes, businesses, transportation, industry and agriculture. They've brought over 130 products and services for green buildings to market, and introduced more than 65 offerings for renewable energy systems. Many pay claims that fund rebuilding to a higher level of energy efficiency after losses.

But climate change may end up impacting insurance policy and governance. When risks are too great or undefined, insurers tighten availability, increase prices, and modify terms of coverage. They often end up dually exposed, to both internal risks such as underestimating climate-related losses, and the risks taken by their customers. More than one in four corporate directors anticipate liability claims stemming from climate change. They have responded with new liability products, and by excluding climate-change claims where customer behaviors are unnecessarily risky.

But the insurance industry’s steps towards climate change mitigation and adaption are necessarily going to be limited, and the risks of climate change my eventually become uninsurable. And it seems that many companies are struggling to define their approach. Mandatory risk disclosures identified a broad consensus on the relevance of climate change among insurers in the United States, but only one in eight companies has a formal strategy.

Insurers publicly voiced concern about human-induced climate change four decades ago, and have warned that loss-prone development is unsustainable. Lloyds of London views climate change as the industry’s number one issue.

Allie Wilkinson
Allie is a freelance contributor to Ars Technica. She received a B.A. in Environmental Studies from Eckerd College and a Certificate in Conservation Biology from Columbia University's Earth Institute Center for Environmental Sustainability. Twitter@loveofscience

How to increase the number of weather related claims? Build new stuff in places where they are more likely to happen anyway, ignoring any change in the amount of weather related incidents.

Plus an increased amount of housing/more people as populations have grown.

The point being, a quintupling may seem like an alarming headline figure, but it's not necessarily reflective of the actual change due just to the change in the number of weather based events, it's a way of sensationalising the whole thing even more.

As the population has increased by around 40%, you would expect a natural 40% increase assuming historically consistent decision making with regards to locations, meaning 5x is reduced to around 3.4x as many claims on a per capita basis.

As we expand our development, it stands to reason that storms damage more property, thus increasing the cost. Claims have doubled every decade, but what about their revenue stream? I suspect all that new development paid lots of new premiums.

Only politicians, activists and journalists searching for a story have actually tied any particular local or regional weather events to climate change. Serious climate scientists have not, for a very simple reason: There has not yet been enough "climate change" to influence local weather events.

All climate models have predicted increase in occurence of freak weather events under rising average global temperature. Weather is such a complex phenomenon that no one is 100% certain or claim to have proven it, but measurement data so far has certainly support the claim.

Also, it makes sense in a simplistic point of view, higher absorbtion of solar energy means more entropy in the system, and this will result in more floods, hurricanes, etc.

How to increase the number of weather related claims? Build new stuff in places where they are more likely to happen anyway, ignoring any change in the amount of weather related incidents.

Plus an increased amount of housing/more people as populations have grown.

The point being, a quintupling may seem like an alarming headline figure, but it's not necessarily reflective of the actual change due just to the change in the number of weather based events, it's a way of sensationalising the whole thing even more.

As the population has increased by around 40%, you would expect a natural 40% increase assuming historically consistent decision making with regards to locations, meaning 5x is reduced to around 3.4x as many claims on a per capita basis.

I'm sure the professionals in the insurance industry never thought of this. Thanks so much. You could become the top-paid consultant to the insurance industry with such unique, never-before-heard-of insight. -_-

How to increase the number of weather related claims? Build new stuff in places where they are more likely to happen anyway, ignoring any change in the amount of weather related incidents.

Plus an increased amount of housing/more people as populations have grown.

The point being, a quintupling may seem like an alarming headline figure, but it's not necessarily reflective of the actual change due just to the change in the number of weather based events, it's a way of sensationalising the whole thing even more.

As the population has increased by around 40%, you would expect a natural 40% increase assuming historically consistent decision making with regards to locations, meaning 5x is reduced to around 3.4x as many claims on a per capita basis.

I'm sure the professionals in the insurance industry never thought of this. Thanks so much. You could become the top-paid consultant to the insurance industry with such unique, never-before-heard-of insight. -_-

They take it into account through higher premiums, or by not offering insurance to those places.

My point was that the quintupling is just sensationalism of the issue.What the people at the top known and take into account isn't what the media cares about, and isn't what the average person necessarily considers.

I'm sure you took it all into account before reading my points. Assuming you even read what I wrote. Which was mostly about the quintupling and how it was a pretty sensationalist figure, and not entirely related to climate change, and not anything that was "industry advice".Hell, I even linked a couple of news articles on one of the points because it's a well known thing...

Your point however, was much more insightful and relevant, and your contribution to the discussion is much appreciated.

As we expand our development, it stands to reason that storms damage more property, thus increasing the cost. Claims have doubled every decade, but what about their revenue stream? I suspect all that new development paid lots of new premiums.

Looking at 2 years is irrelevant in the insurance industry, since the whole point of insurance is it's based on risk and averages. If you have a couple of good years, then you need to make profits. These offset the massive payouts you might need to make when something like Katrina comes along and requires a lot of payouts.

Also raw numbers, like $49bn or $73bn are also irrelevant. Those seem like massive profits, in theory, but what if they represent only a 1% profit margin? Then your business is cutting it fine, and could be barely profitable at all.

Then there's the complications of the way that profits are worked out, which means that the 2005 profits are reduced due to Katrina and booking probably claims, while the 2006 profits are higher because they probably booked the majority of Katrina claims in 2005, which is why you need to look at profits over time and on average, because isolated major events can potentially skew things massively, and the whole point of insurance is that it's a distribution of risk over time (for the insurer).

The concept is fine, looking at the profits of insurers, but the execution in that particular article is poor and doesn't really tell you anything.

Only politicians, activists and journalists searching for a story have actually tied any particular local or regional weather events to climate change. Serious climate scientists have not, for a very simple reason: There has not yet been enough "climate change" to influence local weather events.

As we expand our development, it stands to reason that storms damage more property, thus increasing the cost. Claims have doubled every decade, but what about their revenue stream? I suspect all that new development paid lots of new premiums.

The insurance industry, much like the RIAA/MPAA, loves to play the victim while raking in tons of cash. Insurers are always happy to raise premiums using whatever justification they can come up with, but strangely enough they are always hesitant to actually pay out claims when their customers need them.

FL has a state-run not-for-profit insurance provider call Citizens. The official role is to provide insurance on properties that traditional insurance companies consider too high of a risk. It's a great idea, have everyone pay into a risk pool that will cover any damages if and when they occur, but get the most out of everyone's money by removing the need for profit for investors/shareholders and thereby reducing overhead and administrative costs. Unfortunately the rates for Citizens are higher than many private insurance firms because Citizens' entire book of business is high risk properties. Allowing anyone to buy in could have increased the income to the risk-pool and dropped the average risk per property enough that costs would have dropped below that of for-profit insurers.

Tea-party whack-job, He-Man villain, and FL Governor Rick Scott unfortunately decided to go the other way and jacked up the prices for Citizens insurance, started a campaign of having inspectors go out and find (oftentimes made-up) reasons to drop homes from coverage, and has tried is darndest to destroy it so that everyone will have to run into the money-grubbing arms of his big business insurance pals.

Regardless of any long term climate impacts, the simple fact of the matter is that many people do not pay the full cost for the risk that natural disaster presents. This is especially true of disasters which are extremely infrequent and present the risk of total loss. It's simply politically untenable for insurance companies to charge the full actuarial risk in these cases - as they would be accused of taking obscene profits as they build up a cash hoard in order to pay off the next Katrina. There's also the risk with public companies that shareholders will view that massive cash hoard as a waste and raid it.

So I think this move by the insurance industry to embrace climate change is very canny. It both justifies higher premiums in the political arena, and justifies properly capitalizing loss reserves to the shareholders. "Win-win" as they say.

It amazes me how fast the deniers jump on this. Insurance is one of the most conservative industries in existence, and it is by design. They have done a ton of work to ensure they know whats going on here, and would not be saying anything if they were not certain. The fact that they said something 40 years ago is a great demonstration of the level of denial required to still deny human driven climate change and its effects.

Regardless of any long term climate impacts, the simple fact of the matter is that many people do not pay the full cost for the risk that natural disaster presents. This is especially true of disasters which are extremely infrequent and present the risk of total loss. It's simply politically untenable for insurance companies to charge the full actuarial risk in these cases - as they would be accused of taking obscene profits as they build up a cash hoard in order to pay off the next Katrina. There's also the risk with public companies that shareholders will view that massive cash hoard as a waste and raid it.

So I think this move by the insurance industry to embrace climate change is very canny. It both justifies higher premiums in the political arena, and justifies properly capitalizing loss reserves to the shareholders. "Win-win" as they say.

In other words you do not know how insurance actually works. A massive cash hoard is not required, btw, thats simply not how it works at all.

Regardless of any long term climate impacts, the simple fact of the matter is that many people do not pay the full cost for the risk that natural disaster presents. This is especially true of disasters which are extremely infrequent and present the risk of total loss. It's simply politically untenable for insurance companies to charge the full actuarial risk in these cases - as they would be accused of taking obscene profits as they build up a cash hoard in order to pay off the next Katrina. There's also the risk with public companies that shareholders will view that massive cash hoard as a waste and raid it.

So I think this move by the insurance industry to embrace climate change is very canny. It both justifies higher premiums in the political arena, and justifies properly capitalizing loss reserves to the shareholders. "Win-win" as they say.

In other words you do not know how insurance actually works. A massive cash hoard is not required, btw, thats simply not how it works at all.

Regardless of any long term climate impacts, the simple fact of the matter is that many people do not pay the full cost for the risk that natural disaster presents. This is especially true of disasters which are extremely infrequent and present the risk of total loss. It's simply politically untenable for insurance companies to charge the full actuarial risk in these cases - as they would be accused of taking obscene profits as they build up a cash hoard in order to pay off the next Katrina. There's also the risk with public companies that shareholders will view that massive cash hoard as a waste and raid it.

So I think this move by the insurance industry to embrace climate change is very canny. It both justifies higher premiums in the political arena, and justifies properly capitalizing loss reserves to the shareholders. "Win-win" as they say.

In other words you do not know how insurance actually works. A massive cash hoard is not required, btw, thats simply not how it works at all.

Yes, I am aware. The disconnect seems to be in how you think that is applied. Read the article again to see how they determine thier calculations. Political points really have nothing to do with it, and the reserve is not based on whatever they can trump up at the moment.

So a weather event is a "big business" for the corps? Or is it a perfect opportunity for them to lie and make stupid excuses on "hurricanes that start with an S" are unrecoverable according to their late minute ToS change? So many stories arising, fully covered people on how they can't be paid because of inconvenient payouts from insurances... then what the hell are they their for?

Only politicians, activists and journalists searching for a story have actually tied any particular local or regional weather events to climate change. Serious climate scientists have not, for a very simple reason: There has not yet been enough "climate change" to influence local weather events.

There have been plenty of attribution studies - the Russian heat wave of a few years back alone spawned at least 3 i'm aware of.

That's a ridiculous, non-scientific study.

Nature, arguably the most prestigious peer-reviewed scientific journal on the face of the planet, doesn't agree with your assessment. Perhaps that's a sign that you should mediate your position somewhat?

Quote:

Some have even proposed (before climate alarmists beat them into submission) that a gradually warming planet will mean FEWER catastrophic weather events. One example: How about a delay or prevention of the next ice age. I would call glaciers miles thick grinding across North America a catastrophic weather event.

1) An ice age wasn't due for tens of thousands of years anyway. As in, several times further away from today than today is from the beginning of civilization. 2) The warming isn't really "gradual." It's anomalously fast. This speed is part of the reason it's so disruptive, especially for ecosystems. 3) Provide evidence that "climate alarmists" were "beating" other scientists into submission.

Yes, I am aware. The disconnect seems to be in how you think that is applied. Read the article again to see how they determine thier calculations. Political points really have nothing to do with it, and the reserve is not based on whatever they can trump up at the moment.

Yes, so you concede the point that insurance companies require large capital reserves.

As to how the actuarial reserve is calculated, projections of future losses are a large component - those projections will be subject to political pressures. Shareholders will argue that future risk is inflated and thus some of the reserves can be bled down as profits. Politicians will complain that insurance companies underestimate future risk and don't carry enough reserves. Policy holders will point to the massive cash stockpile and complain their their premiums are too high - well heck, they'll complain about premiums no matter what.

Yes, I am aware. The disconnect seems to be in how you think that is applied. Read the article again to see how they determine thier calculations. Political points really have nothing to do with it, and the reserve is not based on whatever they can trump up at the moment.

Yes, so you concede the point that insurance companies require large capital reserves.

As to how the actuarial reserve is calculated, projections of future losses are a large component - those projections will be subject to political pressures. Shareholders will argue that future risk is inflated and thus some of the reserves can be bled down as profits. Politicians will complain that insurance companies underestimate future risk and don't carry enough reserves. Policy holders will point to the massive cash stockpile and complain their their premiums are too high - well heck, they'll complain about premiums no matter what.

Look up 'reinsurance'. Also, I never claimed they didn't need reserves. I claimed that your explanation for how they decide on those things is flawed, you seem to think insurance companies have a desire to find 'excuses' to have larger cash reserves on hand. That is not reality. You are putting forth a conspiracy theory that is 'logical' only in your mind and those who fall prey to such mental traps.

ThunderstormsThe study draws special attention to thunderstorms: besides tropical cyclones, thunderstorms are the most important severe weather hazard for the insurance industry in the US. Between 1980 and 2011, 43% of insured property windstorm losses (US$ 180bn) were caused by severe thunderstorms. Thunderstorm-related losses have increased over the past 40 years. The study identifies two major drivers of this trend. One factor is urban sprawl exposing higher destructible values to the forces of thunderstorms. Parallel to this, the study provides strong indication that changing climatic conditions are having a visible impact.

and

Munich Re wrote:

Heat-waves and droughts

Other events like heat-waves, droughts and wildfires contributed 15% (US$ 160bn) to the overall losses from severe weather events, with droughts accounting for more than half of this. Climate change will alter the occurrence of extremely dry and hot weather conditions. The loss potential of droughts and heat-waves is often underestimated, as their impact is only felt gradually but affects every sector from private households, infrastructure and power supply to agriculture over a huge area. On top of this, long dry periods create ideal conditions for promoting the outbreak and spread of wildfires. New high-temperature records have been set in recent years. To date (including September) 2012 has been the warmest year in the US since the beginning of weather records in 1895, with a mean temperature 3.8°F (2.1°C) above the 20th century average. Nearly two thirds of the area under cultivation was affected by the drought in 2012, which was among the most extreme events of the last 50 to 100 years. Crop insurance will play an even more significant role as climate change evolves.

Shelling out for disastrous weather costs insurance and re-insurance companies money. Climate change loads the die in favor of more disastrous weather. Insurers want to know what it will cost them for paying out w/r/t AGW. And they are not interested in what being in the game or out of it cost the rest of us in terms of re-building costs or what-not except in terms of can the rest of us afford what they believe staying in the game will cost them.

Plus an increased amount of housing/more people as populations have grown.

If insurance companies are singling out climate change as a concern, I'd imagine that they've already accounted for all of this and more. After all, they haven't become the largest global industry by employing idiots.

This line of questioning is no different to those challenging climate scientists, by asking things like- have they considered the Sun? Have they taken clouds into account? If you as a layperson can think of these things, it's very likely that experts who work on these topics for a living have though of them too.

How to increase the number of weather related claims? Build new stuff in places where they are more likely to happen anyway, ignoring any change in the amount of weather related incidents.

Plus an increased amount of housing/more people as populations have grown.

The point being, a quintupling may seem like an alarming headline figure, but it's not necessarily reflective of the actual change due just to the change in the number of weather based events, it's a way of sensationalising the whole thing even more.

As the population has increased by around 40%, you would expect a natural 40% increase assuming historically consistent decision making with regards to locations, meaning 5x is reduced to around 3.4x as many claims on a per capita basis.

I don't know ... Einstein. If you built in a risky place, climate change could make that place more unpredictable and risky. The same for any other place, climate change might create more risky places to live. If you sum over each source contributions, you have to take into account how are those sources coupled, because the sum is not the same without coupling.

Insurers are opting out entirely from regions like southern Florida, because it's impossible to even figure out the risk anymore. The uninsurable regions will only increase in size, and eventually will become a significant political and economic problem outside of any particular region. It's going to be difficult to convince a business to move to your state, or open a branch office, if they can't buy insurance.

Plus an increased amount of housing/more people as populations have grown.

If insurance companies are singling out climate change as a concern, I'd imagine that they've already accounted for all of this and more. After all, they haven't become the largest global industry by employing idiots.

This line of questioning is no different to those challenging climate scientists, by asking things like- have they considered the Sun? Have they taken clouds into account? If you as a layperson can think of these things, it's very likely that experts who work on these topics for a living have though of them too.

Maybe should rephrase my original post.One might EXPECT an increase in insurance payouts due to PEOPLE (not insurers) being stupid.

Therefore you would expect an increase in insurance payouts because people are building houses in dumb locations.Of course the insurance companies take this into account, and charge higher premiums, but that's not related to the 5x figure. The payout figure has probably increased in part because more houses are built in risk prone areas, which has nothing to do with global warming or insurance companies, and everything to do with stupid people/greedy developers/idiotic politicians etc.

Maybe should rephrase my original post.One might EXPECT an increase in insurance payouts due to PEOPLE (not insurers) being stupid.

Therefore you would expect an increase in insurance payouts because people are building houses in dumb locations.Of course the insurance companies take this into account, and charge higher premiums, but that's not related to the 5x figure. The payout figure has probably increased in part because more houses are built in risk prone areas, which has nothing to do with global warming or insurance companies, and everything to do with stupid people/greedy developers/idiotic politicians etc.

Yeah, how people can be so stupid to make the decision to live in a risky home instead of living in the more secure streets. Gosh, how stupid is that!

1. It is in the interest of insurance companies to sell false fears. If I can convince you to pay money for a policy I'll never have to pay off, then I've made a tidy profit.

2. Rising numbers/cost of catastrophes is not a bad thing for insurance unless it is unanticipated. You've already paid the money for your policy - paying off those policies is merely a cost of doing business for them.

3. The primary interest the insurance companies have in predicting the future is doing so better than their competitors. Subsidizing publicly available prediction models does nothing for them from the standpoint of the core business model.

Maybe should rephrase my original post.One might EXPECT an increase in insurance payouts due to PEOPLE (not insurers) being stupid.

Therefore you would expect an increase in insurance payouts because people are building houses in dumb locations.Of course the insurance companies take this into account, and charge higher premiums, but that's not related to the 5x figure. The payout figure has probably increased in part because more houses are built in risk prone areas, which has nothing to do with global warming or insurance companies, and everything to do with stupid people/greedy developers/idiotic politicians etc.

Yeah, how people can be so stupid to make the decision to live in a risky home instead of living in the more secure streets. Gosh, how stupid is that!

Of course it's stupid.

None of this information is new or surprising and anyone who is 'caught out' must have done no research whatsoever when buying their property. Most mortgage providers won't even give you credit until you've had surveys done to assess flood risk and every school child studies enough geography to know what a flood plain looks like so there is no excuse for buying a house in a high risk area.

In the UK we've had an unbelievably wet year that has been causing chaos across the country with almost a metre of rain where I live so far. Because I don't live on a flood plain (because I'm not that stupid) the impact of this on me has been absolutely zero.

Unfortunately, when new housing developments are built, they tend to be on land which hasn't been used for a reason. A few miles from here, there is a proposal for an expensive new development ($500k minimum) on farmland which floods every time there is heavy rain. How much is that going to cost insurers when we get another year like this? The impact of development on flood risks in the UK has been catastrophic - the ability of the ground to soak up rain has been reduced as people build on gardens and flood plains are developed. Where do they think this water is going to go?

Even without increased precipitation caused by climate change, we would be seeing an enormous increase in weather related insurance claims. You have the following trends:

Each one of these will make the impact of a weather event much greater and that's where these huge claims increases come from. It doesn't take a factor of 10 increase in rainfall (which wouldn't actually be possible) to produce a factor of 10 increase in flood claims costs, 10-20% might be more than enough.

Finally, I must have missed the bit where actuaries were climate scientists. There job is to look for trends and correlations. Causation is irrelevant and way beyond their knowledge.

Maybe should rephrase my original post.One might EXPECT an increase in insurance payouts due to PEOPLE (not insurers) being stupid.

Therefore you would expect an increase in insurance payouts because people are building houses in dumb locations.Of course the insurance companies take this into account, and charge higher premiums, but that's not related to the 5x figure. The payout figure has probably increased in part because more houses are built in risk prone areas, which has nothing to do with global warming or insurance companies, and everything to do with stupid people/greedy developers/idiotic politicians etc.

Yeah, how people can be so stupid to make the decision to live in a risky home instead of living in the more secure streets. Gosh, how stupid is that!

I'm talking about living on a flood plain, like I linked to in my first post. Building houses on a flood plain or in areas below sea level is asking for trouble. Nothing to do with security or risks relating to how secure things are, but known risks of natural disasters in an area. Compare with something like tornadoes or earthquakes in the US, as well as low lying areas/floodplains.

Hurricane prone coastal areas:14 million: the 1960 population of those areas.8 percent: percent of total U.S. population at the time.

36.8 million: the same population today, according to the 2010 census.12 percent: percent of total U.S. population now.

163 percent: percent growth of the area from 1960 to 2010.

They aren't stupid for moving where jobs/etc are, but people are moving to more risky places to live, resulting in higher insurance payouts without global warming having an impact.Add in global warming and the problem becomes even worse.

How to increase the number of weather related claims? Build new stuff in places where they are more likely to happen anyway, ignoring any change in the amount of weather related incidents.

"People" didn't build it. Developers did. Ones that don't really care once the houses are sold, they have their money. Everything that happens afterwards is somebody else's problem.

It isn't a recent issue. I have a house built in the 1970s that has the same problem. Nearly every house in this subdivision does. What is even more sickening is the insular culture around here, everybody keeps their mouths shut and these houses are resold to new victims.

Maybe should rephrase my original post.One might EXPECT an increase in insurance payouts due to PEOPLE (not insurers) being stupid.

Therefore you would expect an increase in insurance payouts because people are building houses in dumb locations.Of course the insurance companies take this into account, and charge higher premiums, but that's not related to the 5x figure. The payout figure has probably increased in part because more houses are built in risk prone areas, which has nothing to do with global warming or insurance companies, and everything to do with stupid people/greedy developers/idiotic politicians etc.

Yeah, how people can be so stupid to make the decision to live in a risky home instead of living in the more secure streets. Gosh, how stupid is that!

Of course it's stupid.

None of this information is new or surprising and anyone who is 'caught out' must have done no research whatsoever when buying their property. Most mortgage providers won't even give you credit until you've had surveys done to assess flood risk and every school child studies enough geography to know what a flood plain looks like so there is no excuse for buying a house in a high risk area.

In the UK we've had an unbelievably wet year that has been causing chaos across the country with almost a metre of rain where I live so far. Because I don't live on a flood plain (because I'm not that stupid) the impact of this on me has been absolutely zero.

Unfortunately, when new housing developments are built, they tend to be on land which hasn't been used for a reason. A few miles from here, there is a proposal for an expensive new development ($500k minimum) on farmland which floods every time there is heavy rain. How much is that going to cost insurers when we get another year like this? The impact of development on flood risks in the UK has been catastrophic - the ability of the ground to soak up rain has been reduced as people build on gardens and flood plains are developed. Where do they think this water is going to go?

Even without increased precipitation caused by climate change, we would be seeing an enormous increase in weather related insurance claims. You have the following trends:

Each one of these will make the impact of a weather event much greater and that's where these huge claims increases come from. It doesn't take a factor of 10 increase in rainfall (which wouldn't actually be possible) to produce a factor of 10 increase in flood claims costs, 10-20% might be more than enough.

Finally, I must have missed the bit where actuaries were climate scientists. There job is to look for trends and correlations. Causation is irrelevant and way beyond their knowledge.

Sure! you are very smart. Everybody admires you and we understand the burden of being so smart. That's why you don't live in a plain flood zone. Of course, because you live in a communist country where everybody have the same amount of money to pay for a plain flood free risk place, obviously some people is stupid enough to pay for a place in a plain flood zone. Also, everybody have the same opportunity to live in a good place. The demand,offer and availability for a low risk zones are 1:1:1. Sure

How to increase the number of weather related claims? Build new stuff in places where they are more likely to happen anyway, ignoring any change in the amount of weather related incidents.

"People" didn't build it. Developers did. Ones that don't really care once the houses are sold, they have their money. Everything that happens afterwards is somebody else's problem.

It isn't a recent issue. I have a house built in the 1970s that has the same problem. Nearly every house in this subdivision does. What is even more sickening is the insular culture around here, everybody keeps their mouths shut and these houses are resold to new victims.

What I'm wondering is why people seem to think that people today are automatically dumber than people in past decades about where to build a house. If anything people are more informed than ever before, making better decisions which are reflected in the relative value of homes in riskier areas, and as a result the insurable value. Furthermore, over the past decades building standards have increased, mitigating some of the risks previously involved in many areas, making them habitable or at least comparable in risk to areas considered 'safe'. Understanding flood plains, wetlands, and weather cycles has also lead to developers being able to better mitigate such risks, either in construction or in terraforming the land they are developing on.

Even if I were to hypothetically assume that home buyers are now bigger idiots than they used to be, I have difficulty believing other advances have not to a large degree mitigated the riskier locations these hypothetical idiots are buying into.

In other words, this is a tangent to distract from the fact that insurance providers are seeing an increased baseline of risk beyond other trends(which they also track).

Heh. If they believe it, then the last of the deniers should melt away.

So, I'm a conservative guy, one you might call a denier ( don't believe the doomsday part of global warming ); yet this perspective from big insurance, also known as the biggest political machine, actually increases my skepticism.

Was that the intended effect?

For someone experiencing confirmation and selection bias, it is the only effect.